Statutory Report - Meaning and Contents, Auditor's Duties, Auditing Notes B.Com 6th Sem CBCS Pattern

Statutory Report - Meaning and Contents

Statutory Report – It’s Contents and Auditor’s duties  2013, 2014, 2016

Statutory Report: A General meeting of the members should be held by every company limited by shares and every company limited by guarantee and having a share capital within a period of neither less than one month nor more than six months from the date at which the company is entitled to commence business. Such a meeting is called statutory meeting and the board of directors shall, at least 21 days before the day on which the statutory meeting is scheduled to be held, forward a report called statutory report to every member of the company.

Content of statutory report:

a)       It sets out the total number of shares allotted and the mode of allotment.

b)      The total amount of the cash received by the company in respect of the shares allotted.

c)       An abstract of receipt and payment of the company. This report has to be duly certified by at least two directors. Out of which one shall be a managing director along with auditor of the company.

d)      Agenda of the meeting regarding the formation and prospects of the company.

e)      Particulars of directors, auditors, etc.

f)        Particulars of contract.

g)       Under writing contract.

h)      Arrears of call.

i)        Commission or brokerage.

The auditor’s duties before certifying the statutory report:          2016

The statutory report should be certified by at least two directors of the company. The auditor has to certify the correctness of the statutory audit report. Before signing the report, the auditor has to take into consideration the following points:

1. Study of Legal Documents: Auditor should study the documents of the company like Articles, Memorandum and Prospectus very carefully.

2. Checking of Shares: Auditor should check the total number of shares allotted to different classes of shares. He should also check the fully and partly paid share.

3. Checking of Cash: Auditor should check the total amount of cash received by the company in respect of all the allotted shares.

4. Verify the Capital Receipts & Payment: Auditor should be very careful in verifying the capital receipts and payments.

5. Checking of Commission: Auditor should check all types of commission paid or unpaid with the issue or sale of debentures to any one.

6. Verify the Borrowing Power: Auditor should examine that the limit is imposed on the borrowing power of the company. If it is imposed then company has used his powers within limits.

7. Verify the Minimum Subscription: Auditor should also check the minimum subscription is according the requirements of act or not.

8. Checking of Minutes: In order to see the allotments of shares and debentures auditor should examine the minutes of the directors meetings. He should also check the capital expenditure and borrowed loans which are duly sanctioned.

9. Examine the Pass Book: Auditor should examine the pass bank pass book and verify the receipts and payment with it.

10. Verify Documents: It is the duty of the auditor that he should verify all the legal documents of the company. Prospectus, Articles and Memorandum of Association are the most important documents.

Also Read: Auditing Important Topics